Andy's Bp, Inc., A California Corporation, Sabek, Inc., A v. the City of San Jose

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

February 6, 2013

ANDY'S BP, INC., A CALIFORNIA CORPORATION, SABEK, INC., A CALIFORNIA CORPORATION, AND ANDY SABERI, AN INDIVIDUAL, PLAINTIFFS,v.THE CITY OF SAN JOSE, JOSEPH HORWEDEL, INDIVIDUALLY, AND AMIR SHIRAZI, INDIVIDUALLY AND D/B/A MOE'S STOP, AND AMIR SHIRAZI, AS TRUSTEE FOR THE MOHAMMAD M. SHIRAZI LIVING TRUST, AND DOES 1-25, INCLUSIVE, DEFENDANTS.

The opinion of the court was delivered by: Lucy H. Koh United States District Judge

Having considered the submissions of the parties and the relevant law, the Court hereby GRANTS Defendants' Motions to Dismiss Plaintiffs' federal law claims, the first and third causes 6 of action. The Court dismisses Plaintiffs' federal claims with prejudice as Plaintiffs were already 7 granted leave to amend these claims, yet failed to cure the previously identified deficiencies in the 8

FAC.

Further, the Court believes that further amendment will prove futile. 9 In light of the Court's dismissal of Plaintiffs' federal claims, the Court declines to exercise 10 jurisdiction over the remaining state law claims. Therefore, the Court GRANTS Defendants' Motions to Dismiss as to the remaining state law claims-the second, fourth, fifth, and sixth causes of action-without prejudice. Plaintiffs may re-file these claims in state court. In addition, the 13 Court finds that Plaintiffs Sabek, Inc. and Andy Saberi lack standing because of their failure to 14 allege individual injury. If Plaintiffs re-file in state court, Plaintiffs Sabek, Inc. and Andy Saberi 15 must correct this deficiency.

I.BACKGROUND

A.Factual Allegations

Plaintiff Andy's BP is the owner and operator of a gasoline service station. FAC ¶ 14. Plaintiffs Andy Saberi and Sabek, Inc. own the land on which the gas station operates. FAC ¶ 15. 20 Defendant Shirazi owns and operates Moe's Stop, a gas station that is located across the street from 21 Andy's BP. FAC ¶¶ 6, 17. Plaintiffs are in competition with Shirazi in the sale of gasoline to the 22 public. FAC ¶ 16. 23 On or about April 1, 2009, Shirazi requested a Conditional Use Permit ("CUP") from the City of San Jose to allow demolition of a single family residence and expansion of his gas and 25 service station. FAC ¶ 19. Plaintiffs objected to issuance of the CUP, and raised these objections 26 before the San Jose Planning Commission and the San Jose City Council. FAC ¶20. Nevertheless, 27 on June 15, 2010, the City of San Jose approved the CUP for Shirazi. Id. 28

Plaintiffs then filed a Petition for Writ of Mandate against the City of San Jose and Shirazi 2 in the Santa Clara Superior Court. FAC ¶ 21. The Superior Court judge granted Plaintiffs' 3 petition, finding that the City of San Jose "failed to proceed in the manner required by law" when 4 approving the CUP. Id.; FAC, App. A, at 7. The Superior Court then issued a peremptory writ of 5 mandate, which set aside the Shirazi CUP and ordered the preparation of an environmental impact 6 report. FAC ¶ 23; FAC, App. B, at 2. The peremptory writ also ordered the City of San Jose "to 7 suspend all activities of the Shirazi CUP . . . that could result in an adverse change or alteration to 8 the physical environment until completion of the environmental impact report . . . ." Id.; FAC, 9 App. C, at 2. 10

Plaintiffs allege that, thereafter, Defendants City of San Jose and Horwedel, the Director of San Jose's Planning, Building and Code Enforcement Department, unlawfully ignored violations of local zoning ordinances by Defendant Shirazi, while at the same time enforcing the zoning laws 13 and regulations against Plaintiffs in a discriminatory fashion. See FAC ¶¶ 25, 27. For example, 14 after issuance of a second CUP to Shirazi, Defendants City of San Jose and Horwedel allegedly 15 ignored evidence showing that Shirazi improperly remodeled his roof, awning, and garage without a permit from the City of San Jose, and allowed Shirazi to disregard "the CUP conditions regarding 17 the egress and ingress to and from the gas station premises." FAC ¶ 25(c). In contrast, Defendant 18

As a result of Defendants' "unequal enforcement of the laws of the State of California and 21 the zoning requirements of the City of San Jose," Defendants provided Shirazi with a competitive 22 advantage over Plaintiffs' service station business and caused Plaintiffs' economic harm. FAC 23 ¶¶ 24, 27. Consequently, Plaintiffs seek monetary damages for lost business, income, and property 24 use, as well as a permanent injunction restraining Defendants from discriminating against 25 Plaintiffs. FAC at 9--10.26

B.Procedural History

Plaintiffs filed a complaint against Defendants on April 2, 2012. ECF No. 1. Defendants City of San Jose, Horwedel, and Shirazi then filed Motions to Dismiss. ECF Nos. 5 & 6. On June 6, 2012, the Honorable James Ware granted Defendants' Motions to Dismiss Plaintiffs' first and 2 third causes of action, with leave to amend, and declined to consider the merits of Plaintiffs' 3 remaining claims, all of which involved state law. See ECF No. 10 ("Order Granting Motions to 4 Dismiss"). 5

On June 24, 2012, Plaintiffs filed a first amended complaint. ECF No. 11. Defendants San Jose and Horwedel then filed a Motion to Dismiss the FAC based on: (1) failure to state a claim 7 upon which relief may be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil 8 Procedure; and (2) lack of subject matter jurisdiction as required by Rule 12(b)(1) of the Federal 9 Rules of Civil Procedure. See Mot. to Dismiss Pl.'s FAC ("Mot."), ECF No. 13. Defendant 10 Shirazi also filed a Motion to Dismiss Plaintiffs' FAC, ECF No. 17, "on the grounds set forth in the 11 motion to dismiss the first amended complaint filed on behalf of defendants City of San Jose and Joseph Horwedel . . . insofar as those grounds apply to [Shirazi]." Id. at 2. Plaintiffs then filed an 13 opposition the motion filed by Defendants City of San Jose and Horwedel, see Pl.'s Opp. to Defs.' 14 Mot. to Dismiss FAC ("Opp'n"), ECF No. 21, to which Defendants City of San Jose and Horwedel 15 filed a reply, see Defs.' Reply Supp. Mot. to Dismiss P1.'s FAC ("Reply"), ECF No. 22.

This case was reassigned to the undersigned on September 6, 2012. ECF No. 23.

II.LEGAL STANDARDS

A.Rule 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an 20 action for failure to allege "enough facts to state a claim to relief that is plausible on its face." Bell 21 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the 22 plaintiff pleads factual content that allows the court to draw the reasonable inference that the 23 defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 24 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted 25 unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted). For purposes 26 of ruling on a Rule 12(b)(6) motion, the court "accept[s] factual allegations in the complaint as true 27 and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. 28 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

A defendant may move to dismiss an action for lack of subject matter jurisdiction pursuant 15 to Federal Rule of Civil Procedure 12(b)(1). A Rule 12(b)(1) motion to dismiss tests whether a complaint alleges grounds for federal subject matter jurisdiction. If the plaintiff lacks standing 17 under Article III of the U.S. Constitution, then the court lacks subject matter jurisdiction, and the 18 case must be dismissed. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101--02 (1998). 19

Once a party has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the 20 opposing party bears the burden of establishing the court's jurisdiction. See Chandler v. State 21 Farm Mut. Auto. Ins.Co., 598 F.3d 1115, 1122 (9th Cir. 2010); St. Clair v. City of Chico, 880 F.2d 22 199, 201 (9th Cir. 1989) (same).

C.Leave to Amend

If the court determines that the complaint should be dismissed, it must then decide whether 25 to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend 26 "shall be freely given when justice so requires," bearing in mind "the underlying purpose of Rule 27 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks and citation 5 omitted). Nonetheless, a court "may exercise its discretion to deny leave to amend due to 'undue 2 delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by 3 amendments previously allowed, undue prejudice to the opposing party. . . [and] futility of 4 amendment.'" Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892--93 (9th Cir. 2010) 5 (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)) (alterations in original). 6

III.DISCUSSION

Defendants move to dismiss Plaintiffs' First Amended Complaint pursuant to Rule 12(b)(6) 8 on the grounds that: (1) Plaintiffs' equal protection claims fail because Plaintiffs have not alleged 9 discriminatory treatment; (2) Plaintiffs' state law claims fail because they are dependent on the 10 federal claims; and (3) Defendants City of San Jose and Horwedel are immune from liability on Plaintiffs' state law tort claims. See Mot. at 1--2. Defendants also challenge Sabek, Inc. and Andy Saberi's standing pursuant to Rule 12(b)(1). Id. Plaintiffs' oppose Defendants' Motion to Dismiss, 13 arguing that the FAC alleges sufficiently: (1) a denial of equal protection based on a so-called 14 "class of one" theory; and (2) viable state law claims because California Civil Code § 52.1 creates 15 a private right of action for the deprivation of California Constitutional rights. In addition, Plaintiffs contest that the City of San Jose and Horwedel are immune from liability because of the 17 mandatory duties imposed by the United States and California Constitutions. Opp'n at 5, 8--9. For 18 the reasons stated below, the Court GRANTS Defendants' Motions to Dismiss in its entirety. 19

at 2; see Fed. R. Civil P. 12(b)(6). Specifically, Defendants argue that Plaintiffs' claim fails 2 because "no plaintiff is similarly situated with Shirazi and there is no allegation that any plaintiff 3 was treated differently than Shirazi with regard to anything defendants are alleged to have done." 4

Mot. at 1. 5

"The Equal Protection Clause of the Fourteenth Amendment commands that no State shall

'deny to any person within its jurisdiction the equal protection of the laws,' which is essentially a 7 direction that all persons similarly situated should be treated alike." City of Cleburne v. Cleburne 8

The Supreme Court has "recognized successful equal protection claims brought by a 'class of one,' where the plaintiff alleges that she has been intentionally treated differently from others 17 similarly situated and that there is no rational basis for the difference in treatment." Vill. of 18 Willowbrook v. Olech, 528 U.S. 562, 564 (2000) (per curiam); see generally Sioux City Bridge Co. 19 v. Dakota County, 260 U.S. 441, 445 (1923) ("The purpose of the equal protection clause of the 20

Fourteenth Amendment is to secure every person within the state's jurisdiction against intentional 21 and arbitrary discrimination, whether occasioned by express terms of a statute or by its improper 22 execution through duly constituted agents.") (internal quotation marks and citation omitted). 23

However, the Ninth Circuit has cautioned that class-of-one equal protection claims must be

"constrained" to avoid "provid[ing] a federal cause of action for review of almost every executive 25 or administrative government decision." Engquist v. Or. Dept. of Agric., 478 F.3d 985, 993 (9th 26 Cir. 2007). "Where a plaintiff is making a class-of-one claim, the essence of the claim is that only 27 the plaintiff has been discriminated against, and therefore the basis for the differential treatment 28 might well have been because the plaintiff was unique; thus, there is a higher premium for a plaintiff to identify how he or she is similarly situated to others." Scocca v. Smith, No. 11--1318, 2

2012 WL 2375203, at * 5 (N.D. Cal. June 22, 2012). "The goal of identifying a similarly situated 3 class . . . is to isolate the factor allegedly subject to impermissible discrimination. The similarly 4 situated group is the control group." United States v. Aguilar, 883 F.2d 662, 706 (9th Cir. 1989), 5 superseded by statute on other grounds. 6

When making a class-of-one equal protection claim, "several [appellate] courts have 7 indicated that there needs to be specificity [in identifying the similarly-situated class]." Scocca, 8 No. 11--1318, 2012 WL 2375203, at * 5; see, e.g., Ruston v. Town Bd. for the Town of Skaneateles, 9 610 F.3d 55, 59 (2d Cir. 2010) ("Class-of-one plaintiffs must show an extremely high degree of 10 similarity between themselves and the persons to whom they compare themselves.") (internal quotation marks and citation omitted); United States v. Moore, 543 F.3d 891, 896 (7th Cir. 2008)

Thornton v. City of St. Helens, 425 F.3d 1158, 1167--68 (9th Cir. 2005) (denying class-of-one equal 15 protection claim in the regulatory context where Plaintiffs, auto wreckers, could not show that the state entity imposed a burden on the Plaintiffs that it did not impose on others similarly situated 17 within its jurisdiction). Furthermore, as the First Circuit noted in Cordi-Allen v. Conlon, 494 F.3d 18 245 (1st Cir. 2007), "the proponent of the equal protection violation must show that the parties with 19 whom he seeks to be compared have engaged in the same activity vis-a-vis the government entity 20 without such distinguishing or mitigating circumstances as would render the comparison inutile." 21

Id. at 251 (emphasis added). 22

Initially, when granting Defendants' Motions to Dismiss Plaintiffs' first and third causes of 23 action with leave to amend, Judge Ware found that Plaintiffs failed to state a claim for violation of 24 the Equal Protection Clause because Plaintiffs: 25

[did not allege] that they are similarly situated to any person who was treated differently, as Plaintiffs specifically allege that Defendant Shirazi, unlike Plaintiffs,

was engaged in numerous violations of zoning regulations. Plaintiffs' Complaint

further makes clear that Defendant Shirazi, unlike Plaintiffs, applied for a CUP, further undermining Plaintiffs' claim that Defendant Shirazi was similarly situated to them . . . .

Order Granting Motions to Dismiss at 4. 2

In the amended complaint, Plaintiffs fail to cure the deficiencies identified by Judge Ware

3 previously. Notably, in the FAC, Plaintiffs contend that they are "similarly situated with Shirazi as 4 their competing businesses were across the street from each other, located at a busy intersection in 5 the city of San Jose." FAC ¶ 17. However, Plaintiffs present no basis for this Court to infer that 6 the parties' shared profession or geographic proximity are at all relevant to Defendants' alleged 7 discriminatory enforcement of "the laws of the State of California and the laws of the City of San 8

Most importantly, Plaintiffs' FAC does not set forth how Plaintiffs were actually treated 14 differently from Shirazi. As noted by Judge Ware previously, although Plaintiffs allege that San 15

Jose did not enforce violations of Shirazi's CUP, Plaintiffs did not themselves apply for a CUP.

Therefore, Defendants did not-and could not-enforce the CUP differently for Shirazi as 17 compared to Plaintiffs. Similarly, while Plaintiffs allege that Defendant Horwedel subjected 18

Plaintiffs to "harassment citations," Plaintiffs have not claimed that Shirazi violated the same city 19 ordinances without citation. The remainder of Plaintiffs' factual allegations suffer the same defect. 20

Without any specific factual allegations to demonstrate how Defendants treated Plaintiffs 21 differently from Shirazi in the implementation or enforcement of any law or regulation, or why 22

Plaintiffs and Shirazi were alike in all other "material respects," these is no basis for inferring that 23

Defendants violated Plaintiffs' right to equal protection. 24

Despite these flaws in Plaintiffs' FAC, Plaintiffs rely on the doctrine of collateral estoppel

25 to argue that substantial similarity has already been "establish[ed]." See FAC ¶ 29. Again, the 26

F.2d 1154 (9th Cir. 1988) (per curiam). "If a court does not make specific findings, the party must 3 introduce a record sufficient to reveal the controlling facts and pinpoint the exact issues litigated in 4 the prior action . . . If there is doubt, however, collateral estoppel will not be applied. If [a court's] 5 decision could have been rationally grounded upon an issue other than that which the defendant 6 seeks to foreclose from consideration, collateral estoppel does not preclude relitigation of the 7 asserted issue." Id. at 1518--1519 (internal citations omitted). 8

Here, Plaintiffs claim that the Superior Court's order and judgment granting the Peremptory

Writ of Mandate "establish that the City of San Jose treated Shirazi's business of selling gasoline to 10 the public differently to Plaintiffs' similarly situated business by intentionally failing to proceed in a manner required by the laws of the State of California and the City of San Jose." FAC ¶ 29.

However, Plaintiffs' FAC misrepresents the Superior Court's factual findings. The Superior Court's decision addressed whether or not San Jose's issuance of the first CUP to Shirazi 14 was in compliance with the California Environmental Quality Act ("CEQA"). See FAC, App'x A. 15

The Superior Court made no findings related to any actions against Plaintiffs, let alone whether Plaintiffs were subject to an Equal Protection violation, were "similarly situated" to Defendant 17

Shirazi, or were treated differently. Therefore, there is no basis to foreclose these issues from 18 consideration on the basis of collateral estoppel. See Shwarz, 234 F.3d at 435 ("The court need not 19 accept as true . . . allegations that contradict facts that may be judicially noticed by the court"). 20

Given the above-noted deficiencies, the fact that Plaintiffs have already been given leave to

21 amend these deficiencies once but failed to do so, and the fact that it does not appear that Plaintiffs 22 can make any additional allegations to cure these deficiencies, the Court GRANTS Defendants' 23

Motions to Dismiss Plaintiffs' first and third causes of action with prejudice.*fn2 24

B.Plaintiffs' State Law Claims

Defendants also allege that Plaintiffs' state law claims fail because they are dependent on

3 the federal claims. In light of the Court's dismissal of Plaintiffs' federal claims, the Court declines 4 to exercise jurisdiction over the remaining state law claims. See 28 U.S.C. § 1367(c) ("The district 5 courts may decline to exercise supplemental jurisdiction . . . if . . . the district court has dismissed 6 all claims over which it has original jurisdiction"); see also Religious Tech. Ctr. v. Wollersheim, 7 971 F.2d 364, 367--68 (9th Cir.1992) ("When federal claims are dismissed before trial . . . pendant 8 state claims also should be dismissed.") (internal quotation marks and citation omitted); O'Connor 9 v. Nevada, 27 F.3d 357, 363 (9th Cir.1994) ("[I]n the usual case in which federal-law claims are 10 eliminated before trial, the balance of the factors of economy, convenience, fairness, and comity will point toward declining to exercise jurisdiction over the remaining state-law claims.").

Finally, Defendants seek an order dismissing all claims brought by Plaintiffs Sabek, Inc. 18 and Andy Saberi, pursuant to Rule 12(b)(1), on the grounds that they have no standing to pursue 19 the alleged claims. 20

The constitutional limitations on the standing doctrine require a litigant to allege: "(1) a 21 threatened or actual distinct and palpable injury to [himself]; (2) a fairly traceable causal 22 connection between the alleged injury and the . . . challenged conduct; and (3) a substantial 23 likelihood that the requested relief will redress or prevent the injury." Fleck & Assocs. v. City of 24 Phoenix, 471 F.3d 1100, 1104 (9th Cir. 2006) (internal quotation marks and citation omitted). 25

Here, Plaintiffs allege that Andy's BP, the gasoline service station business, sustained 2 damages as a result of the challenged conduct. See FAC ¶¶ 27, 45, and 49. However, neither 3 Sabek, Inc. nor Andy Saberi allege any separate damages for the alleged harm to Andy BP's gas 4 station business. Mot. at 7; but see Fleck & Assocs., 471 F.3d at 1104 ("A plaintiff seeking to 5 invoke federal court jurisdiction must plead that he has suffered some cognizable injury to make 6 the threshold showing of a case or controversy.") (emphasis in original); see also Vt. Agency of 7

Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 771 (2000) ("[T]he Art[icle] III judicial 8 power exists only to redress or otherwise to protect against injury to the complaining party.") 9 (internal quotation marks and citation omitted). Notably, Plaintiffs did not address Defendants' 10 City of San Jose and Horwedel's Motion to Dismiss the claims brought by Plaintiffs Sabek, Inc. or Andy Saberi in their Opposition.

As neither Plaintiffs Sabek, Inc. nor Andy Saberi have alleged the invasion of any 13 cognizable right, they have failed to establish the "irreducible constitutional minimum of standing." 14

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Consequently, Plaintiffs have failed to 15 meet their burden of establishing the Court's subject matter jurisdiction as to claims brought by these plaintiffs. Therefore, the Court GRANTS Defendants' Motion to Dismiss as to Plaintiffs 17 Sabek, Inc. and Andy Saberi without prejudice. See Fleck & Assocs.,471 F.3d at 1106--1107; see 18 also Brereton v. Bountiful City Corp., 434 F.3d 1213, 1216 (10th Cir. 2006) ("Since standing is a 19 jurisdictional mandate, a dismissal with prejudice for lack of standing is inappropriate, and should 20 be corrected to a dismissal without prejudice."). 21

IV.CONCLUSION 22

The Court GRANTS Defendants' Motions to Dismiss Plaintiffs' federal law claims, the 23 first and third causes of action, with prejudice. In light of the Court's dismissal of Plaintiffs' 24 federal claims, the Court declines to exercise jurisdiction over the remaining state law claims. 25

Therefore, the Court GRANTS Defendants' Motions to Dismiss as to the remaining state law 26 claims-the second, fourth, fifth, and sixth causes of action-without prejudice. Plaintiffs may re-27 file in state court. In addition, the Court finds that Plaintiffs Sabek, Inc. and Andy Saberi lack 28 standing because of their failure to allege individual injury. If Plaintiffs re-file in state court, 2

Plaintiffs Sabek, Inc. and Andy Saberi must correct this deficiency. The Clerk shall close the file. 3

IT IS SO ORDERED. 4 5

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